Shares in Bear Stearns continued their sharp decline on Thursday as investors grew increasingly worried about the investment bank’s exposure to Carlyle Capital and other troubled investment funds.

The latest fear is that Bear will end up seizing collateral in the form of mortgage-backed securities from Carlyle and other funds that it will then be unable to sell, saddling it with fresh losses on top of the writedowns it has already taken on its own mortgage-related holdings.